HONG KONG: Tokyo tanked as it led losses across Asia on Friday owing to a stronger yen and expectations for more Japanese rate hikes, and after disappointing data sparked a plunge on Wall Street and fuelled fresh fears of a US recession.

The optimism that greeted Federal Reserve boss Jerome Powell’s indication on Wednesday that borrowing costs could be cut in September has given way to trepidation that the slowdown in the world’s number one economy might be more pronounced than previously thought.

The central bank has for months been looking for confirmation that inflation is well on the way down and the labour market is softening, while at the same time trying to avoid a sharp plunge in business activity. It has largely been confident in achieving a “soft landing”.

But news Thursday that the US factory sector shrunk faster than forecast in July — and for the fourth consecutive month — raised eyebrows.

That came as another report showed the private sector created far fewer jobs than expected in July — and many fewer than in June.

The private sector added 122,000 jobs in July, down from June’s revised 155,000 figure, while unemployment claims also spiked more than anticipated. Focus is now on the release of the major jobs report due later Friday, which will give a clearer snapshot of the labour situation.

The news dealt a blow to investors, who are also dealing with a disappointing earnings season from Big Tech, a key driver of the global rally that has helped push many markets to multiple record highs this year.